The Role of Public Transportation in Advancing Digital Payments

Is a contactless public transportation system a sign of an advanced digital payments society? Important players like Mastercard would think so.

“Take the U.K., for instance,” Iain McLean, Mastercard’s senior vice president of market development in Canada told Bank Innovation. “People use contactless payments on a daily basis, many use it multiple times a day, to the extent that there is nothing unusual about tapping your card.”

That is the goal Mastercard has for its Canadian consumers. And it’s on track to achieving that goal, since already 50% of the transactions in the Canadian market are contactless, according to McLean.

“So, the Canadian people are already are comfortable with using this way of payment, in fact, it’s a reflexive reaction at this point,” Brian Lang, president of Mastercard in Canada.

This consumer willingness to tap and pay, or use mobile payments, instead of cash or an EMV-chip-enabled card is crucial to creating a contactless society. This behavioral change is a process. In Canada, that process started years ago.

“When a new way of payments surfaces, consumers need to be trained to use it,” McLean said. “The more they use it, the more they trust it. In Canada, they have been conditioned to use cards, before cards it was cash, now it’s contactless. But to change that behavior is an evolution.”

The contactless evolution took place at a rapid speed, thanks to merchant willingness to adapt to this method. One of the first places in Canada where Mastercard started offering contactless payments was in the country’s major grocery stores called Loblaws.

“Here we trained our cashiers to teach customers to use contactless,” Phillip Gene, Head of PC Labs and Experience Design at Loblaws told Bank Innovation. “Changing that swipe behavior to tap and go, or now mobile payments needs to happen at a grassroot level.”

That’s why installing contactless payments in something that sees a lot of daily transactions from a lot of people like public transportation is impactful in changing payment behavior, Mastercard’s McLean and Lang said.

Canada is one of the most advanced in digital payments society in North America, thanks to earlier adoption by merchants and consumers, but bringing contactless payments to public transportation could put it on par with a market like the U.K., the contactless champion. Or at least, that’s what Mastercard hopes.

Earlier, this year in May, Vancouver’s TransLink debuted contactless payments becoming the first Canadian city transit authority to offer credit card and mobile wallet payment options to directly ride its system.  This “Tap to Pay” feature accepts both Visa, Mastercard as well as various mobile wallets as a payment method. Within only two months, there were one million commuters using contactless, Lang said.

But not just Canada, Mastercard is trying to add contactless payments to various other transportation systems across the globe. Through the Mastercard Transit Solutions, it is currently working with about 150 cities and fintech partners on the subject.

In July, Milan became the first Italian city to introduce contactless payments on its metro, and Singapore is piloting open-loop payments on its metro with Mastercard.

Mastercard is also in talks to make ‘tap and go’ payments available on New York City’s Metro systems sometime next year.

If only the New York Metro system would work on making the actual rides as seamless as they are striving to make paying for it…

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